to contracts, and even videos. “All you’re doing iscreating a fingerprint of that video such that it uniquelyidentifies the video,” Thankachan says. “It could be ahandshake deal that is videotaped.”The upside of the distributed nature of the data isthat it makes it easy to transfer that data between inter-ested parties, like mortgage originators and under-writers or lenders and servicers. It also can improveauditing while drastically reducing costs. “With a block-chain ledger system, you no longer audit a sample,”Thankachan explains. “You audit every transaction,because it’s all machine readable.”So, what types of mortgage activities will be donevia blockchain in the future? Debbie Hoffman,co-founding partner at Symmetry Blockchain, a com-pany that is advising and assisting developers to helpbuild out blockchain solutions, believes the technol-ogy can be used throughout the entire loan process.

“When I look at blockchain, I look at the lifecycle ofa mortgage,” Hoffman says, “from lead generation andmarketing, to origination, servicing and secondary[markets]. The blockchain can be used at any one ofthose points of entry where you have information.”Title searches are another area where blockchaincould help speed up the mortgage process. Accordingto Thankachan, in the not-too-distant future, every plotof land could have a digital ID stored in a blockchain.

When ownership changes, a new link is added to the
chain to record that transaction. Cook County, Illinois,
already has a pilot program, says Thankachan, and

Blockchain has been in the news a lot lately. The technology behind online cryptocur- rencies like Bitcoin has many people inter- ested in seeing whether the “distributed
ledger” system that tracks all of these virtual curren-cies and stores the data on multiple servers all around
the world can be used to tackle the immense recordkeeping needs of vast industries such as insurance,
securities, land titles and mortgage lending.

Some people are wary of blockchain because of
the hype behind cryptocurrencies, and others are confused by the technobabble that seems to surround any
discussion of the subject. Still, innovators in various
industries are starting to move forward, looking for
ways to use this new digital protocol to solve some of
the world’s biggest data challenges, including safely
storing, tracking and verifying mortgage loan data.

Blockchain explained

“Blockchain, at its basics, is a protocol,” says JasonNadeau, executive vice president of Factom, a com-pany working to harness blockchain technology for themortgage industry. “It’s a bit like saying, ‘the internet.’There’s so many things you can do with it that it’s veryeasy to get it all mixed together.”Nadeau likens blockchain today to the first internetprotocols that came out for the internet in the late

1970s and early 1980s. At that time, he says, nobody
cared except the “geeky networking folks.” The public
didn’t get excited until those early innovators used
internet protocols to create systems for sending
e-mails and creating and displaying web pages.

What excites early blockchain innovators is the protocol’s ability to store data in a way that is virtually
unhackable and immutable, or unchangeable. A blockchain is an actual digital chain of data, says Danny
Thankachan, director of litigation support for law firm
Blank Rome LLP and a blockchain expert. In a blockchain, every cell has the data of the previous cell
embedded in it, along with the data of the current cell.

“Now, do this a million times — a billion times,” says
Thankachan, “and you’ve created a string of transactions that are all interlinked so that it’s impossible to
insert a new transaction without breaking the chain.”

Mortgage applications

The idea of a distributed ledger system may seem foreign to mortgage companies who must safely collect
and store massive amounts of information and signed
contracts, but that is exactly the type of recordkeeping
that blockchain excels at.

Thankachan says that blockchain can be used tostore any type of data, from transactional, like Bitcoin,nology into the latest version of their county titlesystem.

Long-term growth

Blockchain could have some issues when it comes toscaling up to larger systems and integrating betweenpartners. When it comes to scalability, computerpower, which requires a lot of energy, and speed ofhandling transactions are the two main roadblocks,according to Hoffman. But, she says, “There are con-stantly developers out there working to build fasterdistributed-ledger systems.”The bigger issue may be integration, however. “Thewhole concept of a blockchain is that it be used bymultiple parties within an industry,” Hoffman says. “Ifevery player in this industry starts building their ownand working in silos, there’s no benefit.”Hoffman says what is holding back the mortgageindustry is a lack of an organized consortium. Shebelieves the government-sponsored enterprises orsome of the larger companies or tech vendors will needto begin working together on a solution.

That time may not be too far off, according to
Nadeau. He believes blockchain is following a similar
path as other technological innovations, where early
adopters “make some interesting noise in the space,”
but then larger entities follow behind.

“I think 2018 is the year of one or two or three inno-vators and people saying, ‘That’s really interesting,’”Nadeau says. “… We’re three or four years away from itbeing more common than not.”Thankachan has grander plans for blockchain. Heenvisions a world where everyone and everything hasa digital ID. “This is not really going to be that sexy

20 years from now,” Thankachan says. “It’s going to be
just what happens. This will be how we interact with
our environment.” n